Chris Dillow: More Than Keynesianism

Chris Dillow writes that there is More Than Keynesianism to Socialism.

One reason for this is simply that it does little to address what socialists regard as key defects of capitalism—its tendencies towards inequality and alienation. Danny's right to say that Keynesianism was a way of saving capitalism, not abolishing it.  Sure, full employment can help ameliorate these evils by increasing workers' bargaining power. But as Kalecki famously said, full employment is not sustainable within capitalism.

A second reason—which is more pressing today than for years—is that mere counter-cyclical policy does little to increase long-term trend growth; sure it might do so by reducing the fear of recession and thus improving animal spirits, but it's also possible (pdf) that stabilization policy dampens it. Combating the threat of secular stagnation requires more than counter-cyclical policy. Keynesianism in its alternative sense of socializing investment might be part of the answer here—and in fairness this is what Corbynomics is. But only part. There's also a need for policies to raise productivity—and these might require measures to reduce inequality and increase worker ownership.

But there's a further reason why Keynesianism is not enough. Counter-cyclical fiscal policy is insufficient to fight recessions simply because recessions are unpredictable and so we cannot rely upon even a government of intelligence and goodwill to loosen policy at the right time. Anti-recessionary policy requires other institutions. These might include: nationalizing banks to prevent destabilizing credit cycles; a generous welfare state (citizens income!) to act as an automatic stabilizer; and/or Shiller-style insurance markets.

I say all this partly to answer Danny's accusation that socialism is "hazy". Lenin defined communism as "Soviet power plus electrification": I'd define socialism as citizens income plus worker ownership and control.

But I'm also speaking to the left here. It's not enough to be "anti-austerity", and certainly not enough to simply want to shift austerity onto companies and the rich—not least because pre-tax inequality matters too. Good counter-cyclical policy should of course be part of intelligent leftism. But it can only be part.

Emphasis Mine

We have a lot of work to get ordinary workers to understand this.